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The foreclosure hangover: County hopes new land bank will be the cure

by Jonathan Greig
March 14, 2013


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Hommrich and Chavez go over foreclosure documents.

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RealtyTrac

Illinois still sees high numbers of foreclosure in 2013.


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Hommrich and Chavez discuss who may actually be at fault when it comes to foreclosure.


Ins and outs of the newly formed land bank

Hailed as an innovative way to deal with neighborhood decay, the Cook County Land Bank has been praised by business and community leaders alike. The board consists of an equal mix of the two, with expertise ranging from real estate development to advocacy for the homeless.

Having just received an almost $150,000 grant from the Chicago Community Trust, the land bank will begin building a website, hiring staff, creating its rules and regulations, and laying out a business model for the land bank to work.

One of the main hurdles will be with the legal situation surrounding each property.

“There are so many legal innacuracies with these properties, from cloudy titles to lots of back taxes, that we have to deal with those before we can get around to repurposing the property,” Brewer said.

Brewer said the process might take a year or two for some properties, but once they are cleared, they can go to the community and to leaders to figure out what should go there.

“Any plans we decide to go through with will be approved by, and may even come from, developers and municipalities,” he said. “It’s about getting these properties back on the tax rolls and back to productive use so communities can benefit from them.”

‘WAITING FOR THE BOMB’


Regina Klein made her way to the front of the packed room dotted with “Housing is a Human Right” signs and fumbled with the microphone before starting her story.

“I’m just waiting for them to drop the bomb on me,” she said.

Dealing with her second foreclosure, she knows what’s coming. It’s only a matter of time before notices start showing up, plastered to her door, and threats to shut off her water become realities.

In her first battle, her landlord simply disappeared, leaving her holding the bag and fighting to keep the building running.  Her time eventually ran out.

Now, speaking at a community meeting highlighting the need for an end to housing discrimination, she stands in front of a crowd of equally concerned citizens, looking for reasons the most vulnerable members of society are forced to struggle to find basic housing.

“Ninety days just isn’t enough time to find housing,” she said.  “It was tough even when you had six months.”


‘THERE IS HELP OUT THERE’


The office sits buried in a sunny storefront behind a receptionist and a set of cubicle walls. Norma Hommrich and Erika Chavez have been working together for the last three years, helping four to seven families each month deal with a gamut of housing issues.

“People who are losing their homes are struggling financially and emotionally, so they have a lot on their plates,” Hommrich said.

As counselors with the Neighborhood Housing Services of Chicago, Illinois largest non-profit lender, Hommrich and Chavez see a spectrum of housing experiences on a daily basis and share the joy of walking someone through buying their first house as well as the pain of watching a person deal with losing something as personal as a home.

“As a counselor you have to make sure you know your way around hard issues and be able to break into another area of conversation with them,” Hommrich said. “If you do that, it becomes easier, friendlier and it becomes something where they know that you’re going to be helping them.”

They both are quick to remind people that they aren’t psychologists or lawyers, and often have to know when clients might need something they can’t offer. As housing counselors, much of their job comes down to educating homeowners and getting rid of misconceptions.

“Usually when people come here, they think that just being behind on the first month means that they’re going to lose their home,” Hommrich said.

It takes 12-15 months to lose a home to foreclosure, and that’s only if you do nothing to stop it. Some homeowners mistakenly think that once you miss your first payment, you have 90 days to pay or leave, when in reality the “90 day” rule only comes into effect once you’ve gone through all of the foreclosure proceedings.


FAULT LINES

Much reporting has gone into the government’s attempts to curb many of the predatory lending practices that some experts believe sank the housing market in 2008-2009.

Hommrich and Chavez say the situation is far murkier than it is portrayed.

“The homeowner has the obligation to get educated in any type of purchase,” Chavez said. “Even if you’re going to buy a pair of shoes, you need to know what kind of shoes you want and you need. With a house, it’s pretty similar.”

The blame, they say, should fall on all sides.

“Usually when you see the mortgage papers that they bring in to get a feel for where they were before, it doesn’t make any sense why they would prequalify this specific client for that much house, and that high interest and that high ratio,” Hommrich said.

But even with all the bad loans they see, the responsibility, ultimately, comes down to the homeowner.

“The seller is doing their job. The servicer of the bank needs money. They say, ‘If you don’t get educated and ask me the right questions, then I sell you this,’” Chavez said. “They need to eat too.”

Hommrich said most of the bad loans were taken out because the person got rejected from a better loan.

In an effort to stem the tide against the vicious cycle foreclosure sometimes brings with it, NHS requires anyone seeking a loan from them to take their home-buying class, and they offer other classes to teach homeowners about all aspects of homeownership, including foreclosure.

If people are having trouble, they frequently push them to apply to a number of the programs President Obama has set up since 2010 to help people struggling to keep up with mortgage payments, most popular of which is the Home Affordable Modification Program, or HAMP.

Chavez says many families have found relief through the program, which helps homeowners modify their loans to lower monthly payments.

Yet even with these programs, Hommrich and Chavez still see many homeowners struggling with mortgage issues and foreclosure.

There are still 77,000 pending foreclosures in Cook County and 139,000 pending foreclosures in Illinois. Because Illinois does its foreclosures through the courts, it has the fifth longest foreclosure process in the country.

Hommrich and Chavez say there are too many avenues to get help for so many people to still be struggling with foreclosure.

“We could spend hours going through the list of places to get free help,” Chavez said. “We wish people understood just how much help is out there.”


WHAT CAN THE LAND BANK DO FOR YOU?

The damage of foreclosure extends beyond the family affected. The term neighborhood decay has become tragically symbolic of the physical and personal loss of livable housing in neighborhoods across the city.

In mid-January, the Cook County Board agreed to create a countywide land bank to deal with the growing mass of dilapidated properties that had fallen out of use. The land bank will acquire properties and attempt to get them back into productive use, whether for housing, green space or commercial space.

By February, Board President Toni Preckwinkle had already named the land bank’s board of directors, led by Herman Brewer.

Brewer, the bureau chief of the Cook County Bureau of Economic Development, said that now that the board has been named, members can get to work at shaping the land bank and figuring out the best ways to use it.

“The goal of this thing really is to just provide a tool for municipalities to assist communities that are really struggling to get their infrastructure back on its feet,” he said.

There are a number of legal hurdles and tax issues they have to deal with when acquiring and repurposing properties, Brewer said, but once the infrastructure for the land bank is set, many of the murky legal areas will be cleared up.

But for Brewer, one of the main problems has been somewhat dealt with already.

“We went way too far from 2002 to 2008. Credit just became too easy for people,” he said. “Now, the path has gotten a little longer and mortgages are much, much more difficult to get than they once were.”

And as the dream of a home and a front lawn fade for a class of people, many politicians are slowly coming to realize that the error may lie in their emphasis.

At a roundtable discussing the ins and outs of the land bank, Preckwinkle said, “We have been making a public policy error for the last decade in focusing so much on homeownership,” she said. “We have to acknowledge that while homeownership is great and a way to increase your wealth, there are large portions of our population that just should be renters because it’s better for them in the long run and provides more stable housing.”